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Difficulty of Securing Good Management

To secure a good manager, while all-important, is not usually an easy matter. Enterprises are ever looking for capital; capital, even when most busily occupied, keeps a watchful eye on the industrial and business fields for anything a little extra good in the way of enterprises, but the efficient manager is constantly employed and is not looking for new positions. Usually he is not averse to a proposition that will better his condition, but he is not waiting "in the open" for anything of the kind, and must be sought if he is to be found.

At the inception of an enterprise good management is peculiarly desirable, but peculiarly difficult to secure. After running a number of years, a business is usually officered and managed by a process of natural selection. Men of the required ability are secured from the outside as opportunity offers, and in the concern itself members of the force gradually work up to the responsible places for which their ability and experience fit them. The raw material of management is at hand, or comes to hand, and it is then merely the simple matter of fitting the right man into the right place.

In a new business, however, there is neither time nor opportunity for such deliberate discovery and hewing of managerial timber. The process of natural selection must from its nature be slow in results, and there is no means of trying out the manager before he is employed. His selection must depend, for better or for worse, on such information as may be obtainable, and his trial must be a practical experiment made at the expense of the business.

Also in a new business the salary necessary to secure a really capable manager is not infrequently more than can be afforded, and again capable managers are not anxious to ally themselves with new businesses in which the difficulties to be overcome are so great and the need of good management so pressing unless the conditions and possibilities for them are really attractive.

Self-Confessed Managers

The difficulties of securing good management are often complicated by the very number of aspirants for managerial positions. Most of these are not qualified, but the man is a rarity who will admit even to himself that he lacks the highest order of executive ability. On the contrary, men who have never managed a successful business of any kind, and who could not run a corner newsstand with any degree of efficiency, will cheerfully offer their services for the most responsible positions. If through any chance the candidate for the manager's position has some claim for consideration, such as a large interest in the enterprise, or the recommendation of friends or relatives influential in the business, then, no matter what his lack of experience or ability, it will be a difficult matter to keep him out of an executive chair. As a matter of fact one of the most serious obstacles in the way of securing good management is not infrequently this very difficulty of escaping the bad.

Methods of Securing Managers

The usual method of securing a capable and experienced manager for a new undertaking is to take him away from some similar business or enterprise in which he is already successfully employed and in which his ability has been demonstrated. This plan as a rule involves the payment of a higher salary than the desired official is already receiving, and even then is not always successful, as the amiable intentions of the new concern are frequently frustrated by a prompt counter-proposition on the part of the manager's own concern. Also there is a question of business ethics involved in the attempt to induce a trusted employee to leave one establishment for another, and especially when that other is a competing business. Within reasonable limits, however, the practice is common, is sanctioned by custom, and ethical considerations apart-is undoubtedly good business.

If the foregoing plan is not feasible, a successful manager may perhaps be found in some other line of business, preferably one in

which the problems encountered are much the same as those of the new concern. If this is done the qualifications of the proposed manager should be investigated with great care. His success may have been due to his grasp of the details of his own business, rather than to his general executive ability, and in such case he might be an utter failure in another line of business. It should also be borne in mind, in all cases, that the organization of a new undertaking is a far more complex and difficult problem than its conduct when once in good running order, and that a man who can successfully carry on an established business may be totally unable to give an unorganized business a successful start.

Another likely source of good executive material for a new enterprise is among the ambitious and rising employees of established businesses in the same or allied lines. In a large concern it is usually impracticable for all the members of the force to be advanced as rapidly or as high as their abilities justify. There are not always sufficient executive positions to go around, and in such a case the more capable employees who are unable to secure promotion in their own establishment are anxious to find other employment where their ability will find fuller and freer scope. Reliable information as to the qualifications and standing of an ambitious employee who is seeking to better himself may as a rule be obtained direct from his employers, who if they are broad-minded men are very willing to assist him to advancement even though at some loss to themselves. Such information, considered in connection with the position the proposed manager is filling, the manner in which his duties have been performed, and his general character and ability, should give a very fair idea of his executive worth and the likelihood of his achieving a success in the new position.

Financing Value of Good Management

Another phase of efficient management is its utility from the financial standpoint. If the enterprise is yet to be financed, or is

in need of more money, or temporary accommodation, the employment of a manager known to be competent and successful is of most material assistance. Apart from any confidence which men with money may have in the ability of the manager to bring the enterprise to a successful issue, or as part of that confidence, the mere fact that he is willing to have his name coupled with the enterprise is a strong and convincing testimonial to its merits and probabilities of success. It is an incidental indorsement of more weight with the average investor than the favorable reports of half a dozen technical experts.

It might also be noted by those with enterprises to finance that the successful manager is almost invariably a person of some means as well as ability, and that where the enterprise is such as to enlist his entire confidence he is usually quite willing to "take an interest." Where this is the case the indorsement is doubly strong. Such a subscription is not only an addition to the financial strength of the enterprise and a potent argument for other subscriptions, but also amounts to a forfeit from the manager for the faithful performance of his duties and for his loyal and unswerving support of the undertaking.

CHAPTER VI

SUFFICIENT CAPITAL

Results of Inadequate Capital

Capital as an essential of business success will not be questioned. Speaking generally, an enterprise cannot be started without it. Even in the cases of self-developed businesses there is in every instance either capital, or an anticipation of capital that answers the same purpose. Mary Elizabeth had sufficient capital to make her first boxes of candy. Woolworth saved enough money to make his first small start. Montgomery Ward—with the permission of his employers-floated his business on their capital. In every case capital existed in some form or to some extent before the enterprise could be made to move.

Not only must there be capital, but there must be adequate capital. Rarely does an enterprise pay from its inception. Usually it is conducted for a considerable time at a loss. It must be operated and sustained until it reaches the point of self-support. Without adequate capital there is great danger that the new undertaking will be starved before it is capable of supplying its own financial wants. Bradstreet ascribes 32.3 per cent of the failures of the year 1920 to lack of sufficient capital.

Inadequate capital throttles a business in many different directions. Salaries are too meager to secure the best help-goods cannot be bought in large enough lots to secure quantity prices— a full line is not carried-discounts cannot be taken-suitable office or store space cannot be afforded-advertising is skimpy and ineffective. The net result is the starving of the enterpriseeither partial or complete. It must be a good enterprise, ably managed to overcome such a handicap.

Complete failures are even more common, but are not usually

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